Insight Into High Net Worth Donors

As the net worth of wealthier households increases, so does their giving potential.

As the U.S. emerges from the Great Recession, some households are faring better than others. Stock and real estate values have climbed significantly, leading to relatively rapid wealth gains for those fortunate enough to own one or both investments.

The Pew Research Center recently reported that the median net worth of upper-income families ($639,400) is 6.6 times greater than that of middle-income families ($96,500). This gap is the highest in the 30 years the Federal Reserve has been collecting this information. According to Pew’s criteria, roughly 21 percent of America’s families are considered high income (for instance, a family of four earning at least $132,000 per year). Such families have seen their net worth increase by roughly 7 percent between 2010 and 2013.

Understanding the wealthy.

The growing wealth of high income and high net worth individuals makes them prime candidates for charitable gifts. In that vein, a recent study sheds insight on the relationships such individuals have with philanthropy.

According to The 2014 U.S. Trust Study of High Net Worth Philanthropy, 98.4 percent of high net worth households gave to charity in 2013. When projecting their giving for the next three to five years, roughly 85 percent believed they would continue giving at the same level or would increase their gifts.

Just over 75 percent of donors volunteered in 2013, and those who did gave significantly more than those who did not ($76,572 vs. $44,137).

The most common giving level by high net worth donors, however, is between $5,001 and $10,000. Some 89.8 percent of their gifts totaled $100,000 or less. As for estate gifts, over one-third of high net worth donors have philanthropic provisions in their wills, but close to two-thirds do not.

What gift planners should do.

The key for gift planners is to identify their wealthier donors and develop a communication strategy specifically for them. Fundraisers should pay particular attention to the top 10 to 20 percent of U.S. households that have experienced the greatest gains in wealth. Keeping in regular contact with such donors and offering opportunities to volunteer can reinforce these donors’ commitment to your organization.

When affluent donors are considering making larger gifts, suggest noncash gifts of appreciated stock, mutual funds, real estate and other assets that may provide the greatest tax benefits. And don’t forget to encourage such donors to make charitable provisions as part of their estate plans.

Find your wealthier donors.

Discovering your high income and high net worth donors is the first step to encourage more and larger gifts from this important group. By adding age and wealth data to your donor files, you can identify individuals who can be addressed in special ways to help maximize the effectiveness of current and deferred gift planning efforts.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

About Sharpe

Sharpe Group delivers training, consulting and a complete package of donor communication support offerings, including print and digital communications, to charities and nonprofits throughout the United States.